Acer lowers Q1 guidance as iPad 2 rocks PC industry

Shares of Acer stock were down nearly 7% on the Taiwan Stock Exchange Tuesday on news that the PC manufacturer had unexpectedly and significantly lowered it’s first-quarter sales estimates. The PC maker had previously estimated its first-quarter PC sales would grow 3% from the previous quarter. Now, Acer has adjusted its forecast, saying it expects sales to drop 10% compared to the prior quarter. Asustek, an Acer competitor, is also struggling with similar sales declines in the first quarter. Acer cites weakened demand in the U.S. and Western Europe for the drop off in sales. The emerging tablet market lead by Apple’s iPad and iPad 2 devices is also seen as largely contributing to the decline in PC sales. Acer expects its net profit margin to drop below 2% in the first quarter from 2.93% in the previous quarter, though it predicts that second-quarter PC shipments will reverse the downward trend, growing by 10% over first-quarter sales.

Profit margin of 2-3%? What’s the point? They should buy some Apple/Amazon/Google stock and get more return on their capital.

Anonymous

That’s what I was thinking had to read it twice to make sure it was 2-3%!

Generatione

2-3 % of billions of dollars adds up. That’s about what walmart gets and it can be a lot of money. Definitely not fat profits I’ll give you that

Anonymous

But remember, since we’re talking about a percentage, for every billion in profit you have $33-$50 billion in cost. I think LouisLouis4’s point was that a solid investment of cash would return more than 2-3%. As an example, AAPL has gone from $90/share to $350 in two years.

Anonymous

They weren’t lying when they said “This changes everything.”

Anonymous

How can something that doesn’t sell “rock” the industry. Acer is just trying to look for excuses!

Anonymous

Your right they can’t sell what’s already sold out.

http://www.droiddoes.com/ Norm

ZING!

RealDeal

Or it could be because everything Acer makes is crap. Just saying…

Anonymous

I’m with you on that one. Name one thing Acer makes that you really want? I can’t think of anything. It could be significant if it’s their total volume since Acer is a large OEM, along with Asus. But if it’s just their sales under their brand name, well then that’s not particularly surprising.

Tony

What keyboard is that?

g90547

Its actually a laptop. Had to look it up myself Acer Gemstone

Anonymous

I hate the percentages game. We see it all the time – financial reports, news reporting, etc. It’s designed to mislead, as we can see clearly here.

“net profit margin to drop below 2% in the first quarter from 2.93% in the previous quarter, though it predicts that second-quarter PC shipments will reverse the downward trend, growing by 10% over first-quarter sales.”

So the profit margin will be below 2%; but Q2 *sales* will grow 10% over Q1 *sales*. If we look up, Q1 sales are expected to drop 10% over Q4. So to put real numbers on that (if made-up ones)
Q4: 100 systems
Q1: -10% of 100 = 90 systems
Q2: +10% of 90 systems = 99 systems

So: in Q2 they will be selling fewer systems than Q4 but more than Q1; and this (I guess) will edge the profit margin back above 2%?

Also, what’s with the “iPad2 rocks pc industry” — I mean, I knew it was a BGR headline just from this wording alone in my RSS feed.

Anonymous

I don’t mind the story, but the headline really bothers me. How can you write “iPad 2 rocks PC industry” in the headline, when all it says in the story is “the iPad is seen as contributing”? Normally I would just ignore such a blatant grab for page views, but this sort of half-assed “reporting” really annoys me.

jcc

Unfollowing BGR now.

I do not have time for news sources that don’t even bother reading the sources they quoted, or exerting the bare minimum journalistic integrity to avoid sensationalistic re-imagination and misconstruing the news.

One unquoted and unverifiable source thinking this is iPad2 driven (prove it) turns into a headline that makes me think, BGR may have some interesting new insight and proof?

Thanks for suckering me in to read this article. I can now rest assured that i will be wasting no more of my time in the future by skipping all your future articles.

http://www.facebook.com/jinjo235 Adam Kilker

iPad 2 *shakes* PC industry is more like it. Technically it’s not in the same industry as PC’s. Untechnically, people that use any computer for basic functions don’t give a f*** what they buy as long as it gets online and checks email. iPad 1, PC industry 0

Anonymous

you mean

iPad2 – PC Industry 0.

facebook, twitter, email, web, ebooks, music, personal video. mobile.

The iPad is the pc for the people who don’t want a PC…

And surprisingly there are a lot more people who don’t have a PC than do.

My 80 year old dad loves his iPad (my old iPad1). I brought it down and hooked up an old Airport Express (mom who is 78 and writes about 5 pages of correspondence a day has my G5 iMac). Dad now is running circles around my Mom who has been using Macs for 12 years.

Every kid in my parents home town are getting iPad2 as they enter Junior high. That’s 300, plus the family ‘halo’ effect. Why… cheaper than books, copying, and stdized testing, and having 10 computers in every classroom of 30 kids).

No… low margin PC sales will drop dramatically in 2011. drop may be too soft a term… they may just flatline.